Nat West claim we owe £30,000, and we only owe £20,000! HELP!!!

ILW

OP

Were you a director of the company?

SouthCoast

Contact Business Debtline for advice:

http://www.bdl.org.uk/

molerat

The op had a £40k business overdraft facility secured on their home.
They then took out a £20k loan to pay off part of the overdraft.
The overdraft facility was not reduced, just the outstanding balance, and the business ran the overdraft back up to £25k. The business used the facility and the bank now want their money back with interest & charges. The argument seems to be that the bank should not have allowed them to borrow that amount. Only the paperwork will show the facts and I suspect it will not be what the op wants to see.

Thrugelmir

jonyd wrote: »

It was originally a charge to secure business overdraft lending for a limited co business in which i had shares.

Unusual for a shareholder to secure a Limited Companies borrowing facilities. What was actual your involvement in the business? A Director?

dunstonh

Thrugelmir wrote: »

Unusual for a shareholder to secure a Limited Companies borrowing facilities. What was actual your involvement in the business? A Director?

We used to do it back in my banking days where security could not be obtained within the company and the director effectively acted as a guarantor by offering security to cover it.

The op had a £40k business overdraft facility secured on their home.
They then took out a £20k loan to pay off part of the overdraft.
The overdraft facility was not reduced, just the outstanding balance, and the business ran the overdraft back up to £25k. The business used the facility and the bank now want their money back with interest & charges. The argument seems to be that the bank should not have allowed them to borrow that amount. Only the paperwork will show the facts and I suspect it will not be what the op wants to see.

If that is the scenario then I can see no wrong doing by the bank. The £40k facility is an "up-to" facility. If the overdraft fluctuated and went down because of the loan and then back up again then that is not the fault of the bank. The security would remain at up-to 40k until further notice.

Thrugelmir

dunstonh wrote: »

We used to do it back in my banking days where security could not be obtained within the company and the director effectively acted as a guarantor by offering security to cover it.

If the OP was a Director of the Company. Then the defence of ignorance to the financial situation of the Company doesn't stand up. As one fiduciary responsibility of a Director is to be aware of just that.

As this a commercial finance arrangement then the FOS will have no involvement.

getmore4less

As I see this.

The banks still has upto £40k security on an OD as a charge on the OP personal house.

The OP should have got this reduced to £20k charge when the loan was taken.
If this was done then that is the limit of the charge.
If this was not done woops!

By leaving the charge at £40k the bank would be happy lending upto that whatever anyone thought the OD limit was.

Looks like the directors were operating the company insovent.

Annisele

Thrugelmir wrote: »

As this a commercial finance arrangement then the FOS will have no involvement.

I'm not sure that's quite right. FOS do deal with complaints made by "micro-enterprises", and they can also deal with complaints made by people who gave given a guarantee or security for a loan (DISP 2.7.6 (10)).

However - I agree with you on the rest of it; I struggle to see how the OP could have agreed to guarantee an overdraft without knowing the terms of that overdraft.

jonyd

All good stuff. THANKS:)
Bit more clarification then:
1. I was one of 3 Directors, but the only one with any equity.
2. The original security was agreed and signed for as a £40k co o/d.
3. The whole point of the subsequent re negotiation, was to see the sum secured start to go down. The 50 - 50 split, between loan and o/d, was actually the banks idea! LOL
4. The bank staff once told me the new £20k o/d cap hadn't been marked on the file, though it should have been.
Its these facts which should help drill down on the issue here.
The bank messed up, its clear they did, indeed they have told me so.
So why do i have to have my house more exposed as a result of their negligence?
If anybody can tell me that, i'll be grateful....
Thanks everybody so far for your interest.
It is quite reassuring to come home from a long day at work and see people i have never met have taken the trouble to add their pennysworth:)
Its v much apprecaited folks.
Jony D

Thrugelmir

jonyd wrote: »

Its these facts which should help drill down on the issue here.
The bank messed up, its clear they did, indeed they have told me so.
So why do i have to have my house more exposed as a result of their negligence?

So as a Director of the Company you were not aware that the overdraft was rising? What actions did you personally take to manage the cash-flow of the business?

Not expecting answers. These are questions that will arise though.

Interest will continue to compound on the debt (overdraft) until such as it is repaid. The liability isn't capped by the facility limit.

You exposed yourself with the personal guarantee you gave to the bank. All part of the risk of being in business.